(AOF) – During its annual review, the S&P agency confirmed Covivio’s financial rating at BBB+, stable outlook. This confirmation recognizes the solidity of the company’s operational and financial profile. S&P underlines the good performance of the operational profile, diversified and driven by rental dynamics. As a reminder, like-for-like revenue growth stood at +7.1% at the end of March 2024, the occupancy rate increased by 0.4 points, to 97.1%, and the maturity averaged leases close at 6.7 years.
Furthermore, the combined general meeting of shareholders of Covivio approved the amount of the dividend for 2023 at €3.30 per share, as well as the possibility for each shareholder to opt for payment of the dividend in shares.
At the end of the subscription period, open from April 23, 2024 to May 7, 2024 inclusive, 77.50% of the capital opted for payment of the dividend in shares
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Key points
– Fourth largest European real estate company, global operator from design to management, operating in German offices, hotels and residential;
– Assets of €17.4 billion distributed 94% across 3 strategic countries: France for 37%, Germany for 42% and Italy for 15%;
– Assets at 57% in offices in France, Italy and Germany, 28% in German residential and 15% in European hotels;
– Economic model based on 4 pillars: presence in the heart of European metropolises, the design of new or renovated real estate combining energy performance and adaptability, the co-definition of projects and the extension of the duration of leases;
– Open capital with powerful shareholders – the Del Vecchio family (27.18% of capital and + 43% of voting rights), ACM (8.29%), Crédit agricole (8.13%) and Covea (7. 17%), Jean Luc Biamonti chairing the 14-member board of directors, Christophe Kullmann being general manager;
– Solid balance sheet, with an LTV ratio (loan to value, i.e. a debt ratio) of 40.7% and liquidity of +€1.5 billion, reinforced by the choice of payment in shares of the dividend by the main shareholders.
Challenges
– 2024 strategy focused on balance sheet strength with €1.5 billion in disposals (600 completed or closed at the start of 2023) and a reduction in the investment plan;
– Innovation strategy led by a dedicated committee linked to climate issues:
– 3 objectives: invent uses (offering “operated office” services), build intelligent buildings and create value via data (launch of building data management “BOS”),
– partnerships: Impulse Partners, Sekoya, Proptech1, Fondation Politecnico,
– start-ups: integration of their solutions into the industrial process;
– Environmental strategy to reduce CO2 emissions by 40% in 2030 vs. 2010:
– transformation of the entire debt into green bonds (50% at the end of June 2023),
– investment envelope of €254 million;
– Quality of assets: 67% of office assets in central locations and 91% of assets with environmental certification;
– Refocusing of the development pipeline: €2 billion in offices, 80% located in Paris, Berlin and Milan and 67% pre-let, and, in German residential, almost doubling, to 65%, of development operations;
– Rotation of the office portfolio associated, for sales, with real estate development contracts.
Challenges
– Evolution of revalued net assets or NAV, of €91.1 at the end of June 2023, impacted by drops in value, to compare with the stock market price, and the occupancy rate of offices and hotels, of 95.8 %;
– Impacts of inflation and construction delays offset by rent indexation;
– After a 7.6% increase in revenue at the end of June 2023, 2023 target raised to a result of €420 million.
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A demand crisis
According to data from the Federation of Real Estate Developers (FPI), the figures for the third quarter of 2022 continue to be alarming. Sales of new collective housing fell by 12.4% over one year, to 19,006 units. Over the first nine months of 2022, the drop reached 10.2%, to 72,670 units.
Reservations are also plummeting due to the collapse of block sales to social landlords and institutional investors. With interest rates rising, institutional investors are renegotiating or halting operations. First-time buyers are penalized by the rise in rates and the tightening of the Pinel system puts off certain private investors.
Due to the sharp rise in construction costs, the FPI estimates that one in six authorized operations is ultimately not carried out for economic reasons.
Faced with this, prices are still rising: the sales prices of new collective housing increased by 5.9% across France in the third quarter of 2022. Ile-de-France is an exception, with a decrease of 0. 9%.